Interim report July - September 2016

Transcription

1 Interim report July - September 2016 October 19 th, 2016 Mikael Ericson, CEO Erik Forsberg, CFO

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3 Q Highlights Continued good financial development All financial targets met: EPS growth, PD RoI and ND/EBITDAA All time high for EBIT at 517 MSEK for the quarter Delivering on our core strategies Improving market position for PD: R12 investments at SEK 3,1 bn (vs SEK 1,8 bn per Q3-15) Improving market position for CMS: Two acquisitions in attractive client segment Superior value proposition: New flagship client for online payment solution in Switzerland Strong market conditions provides solid growth outlook Sustainable strong volumes expected for European purchased debt market Fragmented CMS industry provides opportunities for profitable M&A strategy Good opportunities to expand core business to adjacent asset classes, new client segments and expanding our offering across the payment value chain 3

4 Financial summary Q3 Q3 Change YTD YTD % Revenues,SEK M EBIT,SEK M * EBIT margin, % n/a n/a EPS growth, % n/a n/a Cash flow from operations,sek M Investments in purchased debt,sek M Return on purchased debt, % n/a n/a Carrying amount, purchased debt,sek M Net debt to RTM EBITDA** Change % *EBIT figures includes items affecting comparability of SEK +15m for Q and SEK -31m for Q ** EBITDA = operating result before interest, taxes, depreciation on tangible and intangible fixed assets as well as amortization and revaluation of purchased debt 4

5 Regional development Northern Europe 47 percent of total revenues Market leader Top five Other Q3 Highlights Excluding IACs, revenues growth mainly from purchased debt through increased investments in the last 12 months. Excluding IACs, slight negative EBIT growth year on year as positive earnings impact from purchased debt is offset by temporarily higher overhead costs during the third quarter. Q3 Q3 Change Fx Adj Excl. PD Revaluations, Quarter % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt YTD YTD Change Fx Adj Excl. PD Revaluations, YTD % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt Items affecting comparability (IAC) in the comparison period, Q3-15, for revenues and EBIT of -31 MSEK. 5

6 Regional development Central Europe 29 percent of total revenues Market leader Top five Other Q3 Highlights Solid revenue growth from increased PD investments. Strong EBIT increase and very solid EBIT margins, mainly from good development for purchased debt, combined with high cost efficiency. ByJuno, the region s e-com financing unit in Switzerland, selected as supplier for online payment services to SBB, the Swiss railway company. Q3 Q3 Change Fx Adj Excl. PD Revaluations, Quarter % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt YTD YTD Change Fx Adj Excl. PD Revaluations, YTD % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt 6

7 Regional development Western Europe 24 percent of total revenues Market leader Top five Other Q3 Highlights Revenues and EBIT positively impacted by good growth in purchased debt, with strong market activity in several countries. Negative growth and earnings impact from weak quarter for CMS in some markets. Action plans in place to improve performance. Q3 Q3 Change Fx Adj Excl. PD Revaluations, Quarter % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt YTD YTD Change Fx Adj Excl. PD Revaluations, YTD % % Revenues, SEK M EBIT, SEK M EBIT margin, % ppt Items affecting comparability (IAC) in Q3-16 for revenues of +11 MSEK and +15 MSEK for EBIT. 7

8 Credit Management Services 60 percent of total revenues Market leader Top five Other Q3 Highlights Underlying revenue adjusted for fx impact unchanged versus last year. Positive impact from acquisitions and servicing of own portfolios, offset by negative growth from external clients. Underlying service line earnings margin in line with last year for the quarter and up 1%-pt year to date. Increased effort to drive future earnings growth through improving organic growth and increasing M&A pace. Two acquisitions announced in October, in Spain and Denmark, creating strong market positions in the SME segment. 8 YTD YTD Change Fx Adj Reported numbers, YTD % % Revenues, SEK M Service line earnings, SEK M Service line earnings margin, % ppt Underlying numbers, including intercompany revenue adjustment* Q3 Q3 Change Fx Adj Reported numbers, Quarter % % Revenues, SEK M Service line earnings, SEK M Service line earnings margin, % ppt Underlying numbers, including intercompany revenue adjustment* Revenues, SEKm Service line earnings, SEKm Service line earnings margin, % ppt Revenues, SEKm Service line earnings, SEKm Service line earnings margin, % ppt *The Q1-Q CMS reported revenues included partially overstated intercompany revenues, however with no impact on earnings

9 Financial Services 40 percent of total revenues Market leader Top five Other Q3 Highlights Strong quarter for PD investments. R12 PD investments at SEK 3,1 bn, up from SEK 1,8 bn one year ago. Adjusted for IACs and revaluations, service line earnings growth of about 12% YoY, mainly due to growth in PD investments partially offset by lower RoI from price pressure and investment growth in lower-yielding portfolio segments. PD RoI adjusted for IACs and revaluation remain at a very solid level of 18% (20% in Q3-15) 9 Q3 Q3 Change Fx Adj Reported numbers, Quarter % % Revenues, SEK M Service line earnings, SEK M Service line earnings margin, % ppt Investments in PD, SEK M ROI, % ppt Carrying value, purchased debt YTD YTD Change Fx Adj Reported numbers, YTD % % Revenues, SEK M Service line earnings, SEK M Service line earnings margin, % ppt Investments in PD, SEK M ROI, % ppt Carrying value, purchased debt Q3-16 Revenue and Service Line Earnings includes revaluation of + 29 MSEK (+29 MSEK for Q3-15) 2016 YTD Revenue and Service Line Earnings includes revaluation of + 51 MSEK (+67 MSEK for 2015 YTD ) Items affecting comparability (IAC) for revenues and service line earnings of +15 MSEK in Q3-16, and -31 MSEK in Q3-15.

10 PD Carrying value & growth SEK M % -1% 3% PD carrying value 36% 26% 33% 15% 13% 26% Q3 % Growth YoY Y o Y comparison PD carrying value: SEK M Book Value growth: 26% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 10

11 Purchased Debt, investments & ROI Q3 16 RTM Investments: SEK 3,1bn (Q3 15: SEK 1,8bn) SEK M MSEK MSEK PD ROI RTM excl revaluation % % 15% 10% 5% 0% FY Q1 Q2 Q3 Q4 1) paid investments 2) booked investments 11

12 Purchased Debt - revaluations Q3 YTD Q3 YTD PD revaluations, SEK M Northern Europe Central Europe Western Europe Total

13 Balance sheet Highlights 30 Sep 30 Sep Dev SEK M % Intangible fixed assets whereof goodwill Tangible fixed assets Financial fixed assets whereof purchased debt Current assets Total assets Shareholders' equity Long-term liabilities Current liabilities Total shareholders equity and liabilities Net Debt

14 Cash flow statement Q3 Q3 Dev YTD YTD Dev SEK M % % Operating earnings (EBIT) Depreciation Amortization and revaluation of purchased debt Income tax paid Changes in factoring receivables Other changes in working capital n/a Financial net & other non-cash items Cash flow from operating activities (CFFO) Purchases of tangible and intangible fixed assets (CAPEX) Purchases of debt Acquisitions and other cash flow from investing activities 2-10 n/a Cash flow from investing activities (CFFI) Free cash flow (CFFO - CFFI) n/a 14

15 Funding base Syndicated bank loan facility (up to SEK 7,5bn) Renegotiated in December 2015 About SEK 1,5 bn utilized per 30 September 2016 Corporate bonds (up to SEK 5 bn under MTN program) SEK 1 bn, 5Y note, issued in March 2012 (margin of 3,10%) SEK 1 bn, 5Y note, issued in June 2013 (margin of 2,22%) SEK 1 bn, 5Y note, issued in May 2014 (margin of 1,60%) Svensk Exportkredit (SEK) private placement of bonds EUR 160m, 7Y note, issued in Jun Debt Maturity Schedule (SEK million) Commercial Paper (up to SEK 1,5bn) SEK 0,8 bn outstanding per Sep 2016 Commercial Paper Bank Loan Bonds Co-Investors for large portfolios of receivables Typically participate by 50-75% of total investment 15

16 Financial targets Financial targets Q3 16 Q3 16 RTM FY EPS growth to exceed 10% per year 14% 12% 18% 2. Return on PD investments to exceed 15% per year 21% 20% 20% 3. Net Debt/EBITDA should be between 2.0 and

17 Delivering on our growth journey Solid market potential Intrum s business model provides a sustainable competitive advantage Our financial platform supports our growth journey Concrete priorities for continued growth 17

18 Concrete priorities for continued growth GROWTH AREA PRIORITY 2016 Q3 YTD DELIVERIES PD - Continued investment growth for our core, consumer unsecured portfolios PD LTM Investments at SEK 3,1bn (vs SEK 1,8bn one year ago) CMS - Operational excellence to drive organic growth and margins - M&A strategy to drive value from market share gains and synergies Service Line Margin improvement Four M&A transactions closed Increasing addressable market 18 - Adjacent asset classes for PD - Expanding client segment coverage - Growing e-com financing solutions - Disciplined approach, without compromising our risk profile Increased PD investments and CMS presence in SME segment Good growth and improved market position for ByJuno in Switzerland

19 19 Q&A

20 20 Appendix

21 This is Intrum Justitia Market leader Top five Other European market leader in an attractive growth market Proven hybrid business model serving the full credit management value chain Delivering consistent, strong financial returns Diversification of risk through broad base of clients, sources and countries Revenue EBIT # Average of employees

22 Intrum Way Objectives, Strategies & Capabilities Stakeholder Objectives Client Increased Profibility Customer A better life Employee The place to be Shareholder The share to own Citizen Better Business for all Core strategies Ensure market leading position Establish superior credit management value proposition Ensure operational excellence in everything we do Contribute to a healthy credit and payment behavior in society Core assets People Capital Data 22

23 Gross Collections vs. Active Forecast - R12 14% 12% 10% 8% 6% 4% 2% 0% Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 23

24 Illustrative example of PD accounting Invested amount: 100 SEK M Gross collection 2.05 x invested amount (SEK M) Y1 Y2 Y3 Y4 Y5 Y6-Y10 Y11- Y15 Y1-Y15 Cash-flow distribution 29% 18% 12% 9% 8% 20% 4% 100% Gross collection Amortisation * Amortisation rate (Amortisation/Gross Collection) 52% 44% 45% 46% 48% 50% 59% 49% Revenues (Gross Collection less Amortisation) Costs ** (mainly Collection Costs) Service Line Profit Service Line Margin 52% 49% 57% 59% 60% 57% 52% 54% Book Value, Average Balance RoI, defined as Service Line Profit/ (Average Book Value) 18% 17% 17% 17% 17% 77% 75% *) The PD amortization equals the change in carrying value in each year. The change in carrying value in turn is a function of the change of the estimated present value of future collections of the portfolio, estimated as the cash-flow from Gross Collections less Collection Costs, discounted at an estimated Effective Interest Rate (IRR) **) Collection Costs are mainly commission charged from Intrum's CMS service line at arms-length prices 24

25 25 One-offs vs Forward Flow, as a % of PD Investments

26 A broad indication going forward Carrying value 30 Sep 2016: SEK 8,059 M +26% y-o-y (SEK 6,418 M) Gross collection: Carrying value x 2.0 Cash flow distribution 30 Sep of Gross collection Y1 21% 23% Y2 17% 17% Y3 13% 13% Y4 11% 11% Y5 9% 9% Y6 7% 7% Y7 6% 6% Y8 5% 5% Y9 4% 3% 26

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